Yields Faced Pressure From Elevated Oil Prices

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Rob Black (0:11)

Welcome in October 8th, 2026

Markets are doing that same old story again, or that same old tune, if you will. The broken record is plain.

The tune is, in case you forgot, oil prices are up. Treasury yields are up. Equity stock market is lower.

Oil prices are up 4% after President Donald Trump said he has no interest in ending the war with Iran. And in fact, a large bombing campaign is likely to start before the midterms. I don't know what's going on here. I just know that I was born, I think, during a pretty unpopular war. My political brain was that smart, but I was a second tour Vietnam baby, my brother Michael was a first tour. And I'll let you figure out what that means. But interesting times because that broken record is still playing out today on the Wall Street that basically has been the story for all of September and beginning of October. Further putting pressure on oil right now is there's no end in sight between the Houthis and Saudi Arabia. That's starting to turn into more of a conflict. And there's no end in sight in the big one between Russia and Ukraine. In fact, that one seems to be escalating right now.

All tied towards, this is wild, watching what's happened with Ukraine. Trump gets into office the second time. He's like, I don't really want to support Ukraine like President Biden did, so we're cutting funding. And Ukraine stopped listening to the United States and Trump says, please don't hit Russia's refining diesel refineries. And Ukraine, you're not giving us money, then we're going to do what we want to do. We're going to hurt their funding if we don't get funding.

Pretty interesting times we live in.

Sticking with the broken record theme, airline stocks, cruise line stocks, they're under some pretty heavy selling pressure with a jump in fuel costs. The initial jobless claims gave us a bit of a reprieve today, and they remain quite low. Initial claims decreased by 2,197,000. Continuing claims for the week ending September 26 were 17,000. They hit 1.71 million users.

I think the big takeaway here is it's a pleasant sounding number. Layoff activity continues to run at low levels. That reflects a solid-demand environment. There's plenty of action in the AI space today. Taiwan Semiconductor Manufacturing said its September revenues were up 55% year-over-year. Samsung is estimating its third-quarter revenue to be up 127% year-over-year. Those stocks have been interesting to watch recently, as we are paying attention to AI. Real quick, I want to give a shout out to my mother. Today is my birthday, but I don't like to celebrate my birthday. I do think about the woman who brought me into this world on my birthday, and everything that came with that decision, everything she gave me, everything she worried about for me, everything she taught me, and all the years she spent being my mom. The older I get, the more I understand that birthdays are really about me, more than my name on the cake. They're about the people who made it possible for me to be here in the first place. So today, I think about my mother.

I wish I could give her a hug, but she's passed. I'm still pretty damn lucky to be her son, though.

Elsewhere in the stock market, Pepsi's a big story today.

They showed sequential improvement, but North America remains challenged. Stock is up slightly, telling you that probably a bottom is in the price because these weren't good numbers. They weren't great numbers in the US. They weren't like sizzle. Pepsi's trading higher following the results, paints a mixed picture of its North America turnaround. The modest move higher probably reflects some relief of sequential improvement. Particularly with shares entering the report near 52 week lows, it's giving it a little bit of a bounce today. Profitability remains a challenge, and the reduced 2026 earnings outlook highlights that work is still needed. International continues to perform well, but Pepsi has yet to demonstrate that improving North American volumes can translate into stronger earnings growth. They are having a big problem with GOP1 inhibitors in the United States.

Interesting story of the day, and it's not an AI story, it's Chipotle.

Mexican Grill, their stock is rallying, as Starbucks is reporting interest in taking over the company. I know you're saying a coffee chain and a burrito chain. That's an odd marriage. Financial Times is reporting that Starbucks has worked with advisors on a potential takeover, introducing the possibility of a premium for shareholders. The proposal status and whether a formal offer exists remains unknown. Leaving investors to weigh the strategic appeal for now. And it's interesting. Starbucks CEO Brian Nichols, he's in the process of doing a successful turnaround at Starbucks and helping the shareholders. He previously led PolyMexican Girl, giving him familiarity with its operating model and growth opportunities. A combination could diversify Starbucks beyond beverages, expand its exposure to lunch and dinner, and potentially use its international relationships to accelerate PolyMexican Girl's expansion. There would be shared technology and corporate infrastructure offering possible efficiencies, although no synergies have been discussed.